Demand remained low in the Russian LDPE market with a surplus of supply from early year

Demand remained low in the Russian LDPE market with a surplus of supply from early year

MOSCOW (MRC) -- Demand for low density polyethylene (LDPE) has been low since the beginning of the year, due to objective reasons in the Russian market in conditions of oversupply, and this factor is putting serious pressure on prices. Prices continued to decrease in February, but not as significant as in January, according to the ICIS-MRC Price Report.

LDPE market remained oversupplied significantly a serious surplus since January, and in the low season it puts additional negative pressure on demand and prices. Amid a great surplus, converters were trying to get the lowest possible prices for polyethylene (PE) from suppliers. Polyethylene fell in price most noticeably in January; in the last month of winter, the decline in prices continued, but not as significant as a month earlier.

The demand for LDPE in the spot was low in January due to the long New Year holidays. There were already no long holidays in February, but the volume of purchases from converters was still not large. Many converters replenished their stocks exclusively for current needs; in fact, no one built up additional stocks. Also, for the second month in a row, many large converters cover their needs for LDPE exclusively within the framework of annual contracts.
Buyers do not make purchases in the spot market.

Some sellers did not sell their January volumes of LDPE, and the balances were shipped this month, which creates even more pressure on the market. In conditions of low demand, some suppliers were trying to stimulate demand by reducing the price of polyethylene, but the volume of purchases from converters does not increase. Some sellers wre still hoping for the spring months.

From their point of view, demand for PE will grow under the pressure of seasonal factors. Scheduled maintenance works will begin at production facilities in Kazan and Belarus will start in April-May, which traditionally increased the demand for LDPE in previous years.

Last week, the prices of 158 LDPE at some sellers reached Rb145,000/tonne, including VAT, and delivery.
Polyethylene for the production of shrink films was offered from Rb154,000/tonne, including VAT, and delivery, and above.

MRC

January ethylene output down by 6.1% in Japan

January ethylene output down by 6.1% in Japan

MOSCOW (MRC) -- Japanese ethylene production in January fell 6.1% from the same month a year earlier to 507,500 t, reported Reuters with reference to data from the Japan Petrochemical Industry Association showed on Thursday.

Ethylene, made from naphtha, is a basic feedstock for petrochemicals that are processed into products such as plastics.

As MRC informed before, Sumitomo Chemical is building additional production lines for its liquid crystal polymer (LCP) super engineering plastic at the company's site in Ehime, Japan. This expansion will increase the group’s production capacity of LCP by around 30%. The new production lines are scheduled to be completed in the summer of 2023. LCP has been used for a broad range of applications, including electronic components for PCs and smartphones.

We remind that last year, Sumitomo Chemical successfully conducted the first waste-based polyolefin production at its laboratory in Japan, by use of the ethylene produced by Axens ethanol-to-ethylene technology Atol. This process value chain is complemented with the upfront “Waste to Ethanol” technology by Sekisui Chemical.

Ethylene is the main feedstock for the production of polyethylene (PE).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased. supply of injection moulding PP random copolymers decreased significantly.
MRC

COVID-19 - News digest as of 17.02.2022

1. PTTGC net profit falls in Q4

MOSCOW (MRC) -- PTT Global Chemical (PTTGC)'s net profit fell by 49% year on year to Thai baht (Bt) 3.25bn in the fourth quarter as petrochemicals output fell due to maintenance shutdowns, said the company. For 2022, the company expects the recovery in downstream demand from external markets to continue supporting its aromatics as well as olefins and derivatives businesses throughout the year. The company's overall sales surged by 59% year on year to Bt139.3bn in the fourth quarter, while earnings before interest, taxes, depreciation and amortisation were up by 20%, PTTGC said in a statement. PTTGC's overall sales in the fourth rose on the back of higher petroleum product prices which tracked the increase in the crude prices as well as a demand recovery from the easing of COVID-19 restrictions, it said. The company's petrochemical prices increased on tightening supply from maintenance shutdowns and a slowdown in production at some producers in the region, the company said.

The tax cut will reduce revenue by 17 B baht (USD526 MM), but that should be partially offset by a rise in other tax revenue as the economy is recovering, Finance Minister Arkhom Termpittayapaisith told a news conference. "The tax is necessary as the government has extended the cap of diesel prices at 30 baht per liter until the end of May," he said.


MRC

Thailand authorities approve tax cut on diesel to help mitigate the impact of high energy prices

Thailand authorities approve tax cut on diesel to help mitigate the impact of high energy prices

MOSCOW (MRC) -- Thailand's cabinet on Tuesday agreed to cut the excise tax on diesel by 3 baht (USD0.0928) per liter for three months, from 5.99 baht currently, to help mitigate the impact of high energy prices, reported Reuters.

The tax cut will reduce revenue by 17 B baht (USD526 MM), but that should be partially offset by a rise in other tax revenue as the economy is recovering, Finance Minister Arkhom Termpittayapaisith told a news conference.

"The tax is necessary as the government has extended the cap of diesel prices at 30 baht per liter until the end of May," he said.

But the country's oil fund, which stabilizes domestic prices, is still unable to borrow 30 B baht as earlier approved by the cabinet, Arkhom said.

The tax cut will give the energy ministry flexibility in keeping retail fuel prices not exceeding 30 baht per liter, said deputy finance minister Santi Promphat.

As MRC reported earlier, EIA forecasts that crude oil prices will fall in 2022 and 2023 from 2021 levels, according to its January 2022 Short-Term Energy Outlook (STEO). In the fourth quarter of 2021, the price of Brent crude oil, the international pricing benchmark, averaged USD79 per barrel (b). EIA forecasts that the price of Brent will average USD75/b in 2022 and USD68/b in 2023. The declining prices are driven by a shift from global petroleum inventory declines during 2021 to inventory increases in 2022 and 2023. Global petroleum inventories decline when consumption is greater than production and increase when production is greater than consumption.

We remind that oil supply will soon overtake demand as some producers are set to pump at or above all-time highs, said EIA, while demand holds up despite the spread of the Omicron coronavirus variant.
MRC

Neste and ITOCHU strengthen partnership to increase availability of SAF in Japan

MOSCOW (MRC) -- Neste and ITOCHU Corporation have expanded their partnership to grow the availability of sustainable aviation fuel (SAF) in Japan, according to Hydrocarbonprocessing.

In the expanded partnership, ITOCHU acts as the branded distributor of Neste MY Sustainable Aviation Fuel in Japan making Neste MY Sustainable Aviation Fuel available first at the two largest Japanese international airports; Tokyo Haneda and Narita.

Already in 2020, Neste, ITOCHU and All Nippon Airways started cooperating, establishing a SAF supply chain in Japan enabling Neste’s first SAF delivery into Asia to take place in Japan. Through their expanded partnership, Neste and ITOCHU are able to support other domestic and international airlines as well as other fuel suppliers at Haneda and Narita International Airports, going forward.

"The relationship between Neste and ITOCHU started in early 2010s when we collaborated on (a) renewable diesel business in California, and we are very pleased to deepen the relationship further. Now, the aviation industry is one of the frontrunners committed to reducing carbon footprint, and we are excited to contribute to their efforts by increasing availability of SAF in Japan in partnership with Neste," said Tsuyoshi Matsumoto, ITOCHU’s General Manager of the Petroleum Trading Department.

“This partnership is a major step forward in making our SAF available in the Japanese market. It underlines our commitment to working together with the aviation industry to achieve its emission reduction targets. We will have a global SAF production capacity of 1.5 MMtpy by the end of 2023. That includes up to 1 MMt of SAF production capacity in our Singapore refinery, with the capacity expansion project scheduled for start-up by the end of the first quarter of 2023. We are ready to support the Japanese and broader Asia-Pacific aviation markets in driving emission reductions,” said Sami Jauhiainen, Neste’s Vice President APAC, Renewable Aviation.

As MRC wrote before, Neste has successfully concluded its first series of trial runs processing liquefied waste plastic at its Porvoo refinery in Finland. After kicking the series off with its first-ever industrial scale trial run with liquefied waste plastic in 2020, Neste has conducted additional runs in 2021. In the course of the trial runs, Neste has been able to upgrade liquefied waste plastic to drop-in solutions for plastic production and develop industrial scale capabilities to upgrade recycled feedstocks. Trials pave the way for continuous and commercial activities. Neste has set itself the goal of processing more than 1 MM tons of plastic waste per year from 2030 onwards.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,363,850 tonnes in January-November, 2021, up by 25% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.

Neste (Helsinki) creates solutions for combating climate change and accelerating a shift to a circular economy. The company refines waste, residues and innovative raw materials into renewable fuels and sustainable feedstock for plastics and other materials. The company is the world’s leading producer of renewable diesel and sustainable aviation fuel, developing chemical recycling to combat the plastic waste challenge. In 2020, Neste's revenue stood at EUR11.8 billion, with 94% of the company’s comparable operating profit coming from renewable products.
MRC